US 30-Year Mortgage Rates Hit Three-Year High of 7.28%
Average 30-year mortgage rates rose to 7.28% as economic growth and Federal Reserve policy shifts drive borrowing costs to their highest level in three years.
The average 30-year mortgage rate in the United States rose to 7.28% last week, reaching its highest level in three years. This increase stems from accelerating economic growth and inflation, which have pushed up 10-year Treasury yields. The Federal Reserve System contributed to the rise by reducing its mortgage-backed securities portfolio, while commercial banks shifted investments away from these securities toward business loans.
These higher rates have significantly impacted the housing market, leading to a 47% increase in Federal Housing Administration-backed foreclosures over the past year. Institutional investors have reduced their demand, and Fannie Mae reported a drop in new mortgages for investment properties and second homes. The National Association of Realtors noted a corresponding decline in non-primary residence sales.
Despite the rise in borrowing costs, the current trend is viewed as a return to pre-pandemic equilibrium. Home-price appreciation has slowed, and wages are currently growing twice as fast as home prices, which may improve long-term affordability for homebuyers and provide more negotiation opportunities.
